Overview

Federal healthcare reform, also known as the Affordable Care Act (ACA), made several changes to group health plans. On February 12th, 2014, the administration published the final rule on Employer Shared Responsibility.

We are working closely with our employer clients to ensure that they understand their options under federal healthcare reform. We will continue to have a range of plans for our employer groups that meet both the ACA requirements and the needs of local employers, and will update these plans in line with changes to the regulations.

Here are some answers to some frequently asked questions about ACA related changes:

In 2015 and 2016, what is my company required to offer our employees?

Employers with 100 or more full-time employees must offer health coverage to at least 70% of their full-time employees in 2015.

Employers with 50-99 full time employees will receive an additional delay of 1 year to 2016

Starting in 2016, all employers with 50 or more employees must provide coverage to at least 95% of full-time employees to avoid penalties

Transitional relief for non-calendar year plans to start providing coverage at the start of their plan year rather than January 1, 2015

Health plan coverage for employees and their dependents (children under 26, but not spouses)

A plan that meets the federal Minimum Essential Coverage requirements

A plan that meets the minimum actuarial value of 60 percent, so employees will only cover 40 percent of the costs of their benefits

A plan where the lowest cost option requires employees to contribute no more than 9.5 percent of their household income for self-only coverage

The option for the employee to decline coverage that doesn’t meet minimum value or is not affordable

If you don’t offer minimum essential coverage from 2015 onward, you will be required to pay an annual penalty calculated as $2,000 per full time employee (FTE), minus 30 employees. You will not face a penalty because an employee receives a tax credit for dependent coverage.

If you do offer minimum essential coverage you may still have to pay a penalty if one or more of your full-time employees receives a tax credit or cost-sharing subsidy through the exchange. This could happen if the coverage is “unaffordable” or does not meet minimum value for your employees. This penalty is the lesser of:

$3,000 per full-time employee qualifying for a tax credit or cost-sharing reduction, or

$2,000 for each full-time employee

How will this affect taxes and fees?

Larger employers will need to pay new taxes and fees. If you purchase coverage from Premera you will pay a pro-rated version of these fees and taxes for plan years beginning in 2013 which continue into 2014. You will pay the full cost for all plan years beginning in 2014. Please contact your Premera account executive for more information on ACA taxes and fees if you have a self-funded plan.

Is there a reinsurance assessment fee?

In 2014 both self-funded and fully-insured plans will pay a reinsurance assessment fee of $5.25 per member per month. This fee is estimated to decrease to $3.57 per member per month in 2015 and $2.31 per member per month in 2016.

What about the ACA tax on insured health plans?

Fully-insured groups will also be responsible for the ACA tax on insured health plans. We estimate that this will be 1.9 percent of premium in 2014, increasing to 2.7 percent of premium in 2015. It will remain at this rate for 2016 and beyond.

The ACA also includes provisions to encourage employee wellness programs which will allow you to provide discounts on employee rates as a reward for healthier behaviors.

Open enrollment for 2015 individual plans ended February 15. But you may be able to enroll or change plans now if you experience a qualifying life event.